Council for Economic Analysis secretary Plamen Nenov told Bulgarian National Radio that the country needs gradual fiscal tightening since the economy is running hotter than its actual capacity, according to central bank numbers. The economist said raising VAT is not ideal because it would spike inflation in the short term, even though consolidation needs to happen somehow, and the real question becomes who ends up footing the bill for budget fixes.
The CEA dropped its third report looking at what joining the eurozone does to the economy. Nenov explained that cutting currency risk lowers interest rates and boosts asset values like housing and stocks which then pumps up wages plus investments across the board. Bulgaria already operates under a currency board so most of that risk vanished when eurozone entry got locked in, making the transition less dramatic than what Estonia went through after their financial crisis when they switched over.
The CEA dropped its third report looking at what joining the eurozone does to the economy. Nenov explained that cutting currency risk lowers interest rates and boosts asset values like housing and stocks which then pumps up wages plus investments across the board. Bulgaria already operates under a currency board so most of that risk vanished when eurozone entry got locked in, making the transition less dramatic than what Estonia went through after their financial crisis when they switched over.
